Britain’s biggest supermarket chain Tesco is expanding from retail into wholesale.
It plans to buy leading UK food wholesaler Booker for 3.7 billion pounds (4.3 billion euros).
The move means Tesco will also be supplying many of Britain’s cafes, restaurants and pubs, an area which is growing faster than the eat-at-home market served by its shops.
Booker sells food to 450,000 outlets, including chains such as Wagamamas and Carluccio’s. It also owns about 200 cash and carry warehouses in the UK and supplies the Budgens, Londis and Family Shopper grocery chains, which are run as franchise operations.
NFRN (@NFRN_Online) January 27, 2017
This shows growing confidence after two years of turmoil at Tesco.
Chief Executive Dave Lewis said the merger would “further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital”.
Lewis took the helm at Tesco in 2014 it was in a state of crisis and losing market share rapidly following an accounting scandal. Since then he has streamlined its sprawling international business.
Tesco swallowing Booker raises questions over market domination – many of Tesco's smaller rivals rely on Booker as their wholesaler— Chris Choi (@Chrisitv) January 27, 2017
Lewis rejected suggestions that the deal could run into problems with the UK competition regulator.
“This is not a case of Tesco buying any more stores. We actually don’t see there to be an issue in terms of competition,” he told BBC radio.
BBC Radio 4 Today (@BBCr4today) January 27, 2017
How Tesco’s £3.7bn Booker deal will impact its brand https://t.co/SISWYCCw5e— FlourishMarketing&PR (@FlourishPR) January 27, 2017